37 stocks' lock-in period ends this year; these 10 scrips' lock-in period will end in September

IPO lock-in period: The domestic market saw a flood of initial public offerings (IPOs) this year, and the momentum is likely to continue. As the flow continues, starting Friday until December 2023, as many as 37 stocks will get free from their lock-in periods, according to a report by Zee Business. Promoters and anchor investors have a mandatory lock-in period for their respective investments, before which they cannot sell their holdings. After the lock-in period ends, the respective investors or promoters can then sell the shares they own in the company.

 

As numerous lock-in periods will be lifted until December this year, a total of 227 crore shares in different tenures of 37 companies will be up for grabs for investors. Out of 227 crore shares, 126 crore shares are held by Life Insurance Corporation (LIC). LIC's shares, locked at 1.5 to 2 years, will end on November 13. Lock-in will be removed from 20 per cent LIC shares on Monday, November 13.

In September, the lock-in period will end for the following 10 stocks:
 

It must be noted that the recently listed companies, Yatharth Hospital, SBFC Finance, and Concord Biotech's 30-day lock-in period, will end in September.

Why is a lock-in period needed?

The purpose of this period is to ensure that investors do not sell their shares immediately after an IPO, which would likely result in a loss for the company. It also allows the company to raise more capital by selling additional shares to investors who are willing to hold them for a longer period of time. After the period expires, investors are free to sell their shares on the open market. However, if the share price has dropped below the IPO price, investors may be subject to a penalty or loss, explains Upstox. Hence, the lock-in period allows some stability in share price right after an IPO, thus helping both investors and the company.

Types of lock-in periods

Types of lock-in periods in the domestic stock market, as per SEBI guidelines include:

• Lock-in of 90 days on 50 per cent of the shares allotted to the anchor investors from the date of allotment as well as a 30-day lock-in on the remaining 50 per cent of the shares (Initially, the anchor investors' lock-in period was 30 days but later got extended to 90 days)
• "In the case of promoters, the lock-in requirement for allotment up to 20 per cent of the post-issue paid-up capital has been reduced to 18 months from the earlier 3 years. The lock-in requirement for allotment exceeding 20 per cent of the post-issue paid-up capital is reduced to 6 months from the earlier 1 year," according to Angle One's report.
• In addition, the lock-in period for non-promoters has been reduced to 6 months from 1 year.

Catch latest stock market updates here. For all other news related to business, politics, tech, sports and auto, visit Zeebiz.com.